Tax season is in full swing. Taxpayers receiving a refund tend to file earlier in the year, while those who owe Uncle Sam often wait until closer to the filing deadline. Whether you file now or wait until the last minute, make tax time easier with these tips.
Start by collecting all your tax documents and information, including W-2s, 1098s, 1099s, receipts and a copy of last year’s return. Worried about forgetting something? Use a tax return checklist like the one offered at www.taxact.com/checklist.
Take a few minutes to get familiar with key tax law changes and expiring tax breaks. Notable changes this year include an increase in the standard deduction and standard mileage rates, and an end to the Making Work Pay Credit. A great place to start is by reading the one-page section called “What’s New for 2011” in IRS Publication 17 at www.irs.gov.
Do your own taxes using an online or downloadable tax preparation solution. Products are designed for both tax experts and novices, guiding you step by step through your entire return, as well as your credits and deductions. The programs do the math, complete the forms and identify possible errors for you. If you need help from a tax expert, top solutions provide easy, in some cases free, answers.
Although these easy-to-use solutions do the hard work for you, remember they can’t necessarily catch your data entry errors. Common errors include incorrect Social Security numbers, misspelled last names, and incorrect bank account numbers for direct deposit. Spend an extra minute or two checking this information to avoid rejection of your return.
It’s common to spend upwards of $50 for a tax preparation solution, but there are quality free solutions. Compare free products carefully, as there are important differences. Many experts consider TaxACT to be the most complete free federal product, as it includes all e-fileable forms, free e-file, and free tax help. If you’re changing solutions or filing for the first time, TaxACT in particular makes your experience easier with data import and fast start options. You can usually try online products risk-free, so you may find it worthwhile to take a couple for a test drive.
Electronically file your return. More than 100 million taxpayers chose this easy, convenient, and safe way to submit their federal returns last year. E-filed returns are processed faster than paper returns, and e-filers receive confirmation when their returns are processed, usually within minutes. If you owe taxes, you can e-file at any time and schedule payment via electronic funds withdrawal or credit card up until the filing deadline. Most states encourage e-filed returns.
If you’re among the three out of four Americans who receive a refund from the IRS, e-file and select direct deposit for the fastest receipt. Your refund can be deposited directly into up to three accounts in as few as eight days (instead of six to eight weeks for mailed checks).
The deadline for filing tax year 2011 federal and most state income tax returns is Tuesday, April 17, 2012. Although you have a couple extra days to file, don’t wait until the last minute. Rushing can result in data entry errors, and carefully reviewing tax credit and deduction information could end up saving you money. If you’ve experienced major life changes over the last year, allot extra time to make sure you get all your tax benefits.
If you need more time to file, simply file IRS Form 4868 for an automatic six-month extension to file. Keep in mind an extension does not extend your time to pay, so pay as much as possible by April 17. Filing late will land you a 5 percent per month penalty, up to a maximum for 25 percent of the unpaid balance, and the failure-to-pay penalty is 0.5 percent per month. Call the IRS to discuss payment plans and options if you can’t pay your bill in full.
More tax tips and information can be found at www.irs.gov. To learn more about TaxACT and its Free Federal Edition, visit www.taxact.com.